This email was sent to Money Box subscribers on 1 April 2011

Dear Listener

 

Today the first of the major cuts in benefits begins. Housing Benefit will be restricted in several ways saving £220mn in 2011/12. The biggest change will be to reduce the rent which housing benefit will pay. Tenants of private landlords who first claimed housing benefit on 6 April 2008 or later do not get their actual rent paid. Instead the calculation uses a notional rent called ‘local housing allowance’. That was fixed at the median rent for the local area for a home with same number of bedrooms. The ‘median’ is the rent where half the homes of that type have a higher rent and half have a lower rent.

 

From 1 April, today, that median rent will be replaced by rent at the ‘thirtieth percentile’. In other words a rent at a level where 70% of rents are above it and 30% below. On average that will mean a cut of around 8% in the rent that housing benefit will pay costing tenants an average £10.50 a week. The actual amount will depend on the number of bedrooms and the area in which the home is located.

 

The new percentile will apply at once to new claims from private tenants. Existing tenants will not see the cut until nine months after the next anniversary of their claim. So someone who first claimed on 1 October 2008 will have their rent cut nine months from 1 October 2011 which is 1 July 2012.

 

From 2013/14 this whole complex local rent fixing exercise – done by the Valuation Office Agency – will be ended and whatever the 30th percentile rent is at April 2012 will in future simply be uprated each year by CPI inflation – by then projected to be about 2%.

 

There are other cuts too, some initially made by the previous government, and as they come into play the annual saving on Housing Benefit will rise to £1.765 billion in 2014/15.

 

If you have a question about this or any other welfare benefit, I’ll be here on Wednesday’s Money Box Live with a panel of benefit advisors. You can call the programme when lines open on Wednesday at 1330 GMT. The number to call is 03700 100 444. Or you can e-mail now through the programme page at http://news.bbc.co.uk/1/hi/programmes/moneybox/9442415.stm

 

***IN MONEY BOX THIS WEEK***

 

We will be reporting on what is happening at currency company Interchangefx. More on the programme tomorrow. If you are waiting for foreign currency from this company please contact us moneybox@bbc.co.uk.

 

In November we looked at the activities of CPP which sold its ID theft insurance to people who rang a number given to them by their bank to ‘activate’ their credit card. This week the company has said it is being investigated by the Financial Services Authority and has withdrawn one of its main products. We report on the current position. Past programmes here http://news.bbc.co.uk/1/hi/programmes/moneybox/9209826.stm

http://news.bbc.co.uk/1/hi/programmes/moneybox/9184363.stm

 

Junior ISAs will begin in November for all those children born too early or too late for the Child Trust Fund. Parents, family and friends will be able to put up to £3000 a year into a Junior ISA in shares or in cash, or split between them. The Minister responsible talks to us.

 

Major changes are needed in retail banking to make competition work and improve customer understanding. So will say a damning report on the banks by the Treasury Select Committee published tomorrow. Money Box gets the first broadcast interview by the committee chairman.

 

NHS prescription charges rise from £7.20 per item to £7.40 in England. Scotland joins Wales and Northern Ireland in scrapping them for everyone.

 

Make 12% guaranteed return between now and Monday – go out and buy first and second class stamps before they rise on 4 April.

 

And of course we will have the answer to our question from Tim Harford of Radio 4’s More or Less. If you borrow £1200 to buy a £1000 computer is it better to repay it in 12 monthly instalments or to wait and pay £1200 at the end of twelve months?

 

We will try to squeeze all of that into our Radio 4 half hour (ie 24 minutes). We have already dropped one item and more may follow or be spkn vry rpdly. Find out on Radio 4 on Saturday just after noon. The repeat is on Sunday at 9pm and you can of course listen any time via the podcast page www.bbc.co.uk/podcasts/series/moneybox. Check out our website www.bbc.co.uk/moneybox to follow links, download transcripts, send us stories or ideas you want us to look into and Have Your Say on Junior ISAs.

 

If you have read news of the flatrate state pension and wondering why were not covering that this week, we expect to be doing it next Saturday. The Government is expected to set out its plans in the next few days. So we hope to talk to the Minister next week. The figure for the new pension of £155 is an unofficial estimate based on the previous figure of £140 uprated with inflation by 2015 and rounded up.

 

This newsletter is available at bbc.co.uk/moneybox/newsletter around the time it hits your inbox (tell your friends who don’t subscribe) and you can join nearly 5000 others who enjoy my random but timely thoughts on money 24 hours a day at www.twitter.com/paullewismoney.

 

Best wishes,

 

 

Paul

 

PS don’t forget the programme trail on Breakfast on BBC 1 around 0840. And I am back on Breakfast on Thursday morning around 0640ish and around 0820ish (time is flexible on Breakfast!)


Writing Archive

Paul Lewis front page

e-mail Paul Lewis

All material on these pages is © Paul Lewis 2011